Prescription drug costs are contributing significantly to increases in overall U.S. healthcare spending. In an effort to control the escalating costs of prescription drugs, more and more pharmacy benefits providers are using Prior Authorization (“PA”). Prior authorization is a procedure that pharmacy benefits providers require physicians to follow when prescribing certain drugs to covered individuals. Physicians are asked to contact the pharmacy benefits provider in advance of prescribing certain drugs so that the provider can approve the request prior to the covered individual receiving the prescribed drug.
Pharmacy benefits providers require PA for a variety of reasons. They may ask the physician to provide documentation regarding the patient and the requested drug to verify the medical necessity of the drug and to ensure the appropriate physician is prescribing the drug and providing related services. Authorization criteria may vary depending upon the benefits that are available to the covered individual. Some pharmacy benefit plans have “closed formulary benefits” such that certain drugs are not covered under the plan. PA requirements allow the pharmacy benefits provider to confirm that the requested drug is covered by the individual's plan or that is prescribed for a condition that is covered. Other pharmacy benefits providers require PA for specialized drugs or drugs that have a potential for overuse or misuse or that may be used longer or in higher quantities than are recommended. For some drugs, a less expensive alternative may be available. Some drugs may have limited uses based on studies or FDA approval. Certain drugs may be subject to medical diagnostic tests to ensure a medical benefit. PA requirements allow the pharmacy benefits provider to monitor the usage of such drugs to meet a variety of conditions.
Finally, some pharmacy benefits providers have developed “step therapy” programs that require covered individuals to try generic or less potent drugs before trying other drugs. PA may be used to ensure the physician and covered individual follow the appropriate steps in the program. The provider may ask the physician to provide proof of treatment failure or significant adverse reaction to drugs prescribed initially before authorizing drugs in a later step of the program.
Although PA provides cost-savings to pharmacy benefits providers and their covered individuals, the approach also involves an administrative overhead that reduces the potential of the costs-savings. Many pharmacy benefits providers use the services of a group pharmacy benefits provider such as Humana Inc. The pharmacy benefits or network providers work with a group provider that assists with implementation of a PA program that meets the needs of the network provider. PA involves one-on-one communication between a physician and a representative of a pharmacy benefits or network provider. The network provider may rely on a clinical pharmacy review division of the group provider to determine whether certain requests meet the authorization criteria of the network provider.
Requests are submitted by fax or telephone to the group provider's clinical pharmacy review division where a representative reviews the request and the applicable plan details to determine whether the request meets the authorization criteria for the network provider. The volume of requests forwarded to the clinical pharmacy review division is substantial. For example, in a given day, Humana's clinical pharmacy review division handles approximately 6500 inbound contacts, 2000 by fax and 4500 by telephone call. As many as 80% of the requests it receives are from the pharmacy benefits providers.
One way to reduce the administrative burden is to streamline and automate the PA process. Automation requires appropriate computer communications between the prescribing physician, the pharmacy benefits or network provider, the pharmacy filling the prescribed drug, and in many instances, a clinical pharmacy review division. Computer technology has been applied to the PA process to automate certain aspects of it. Such systems, however, typically allow only one party such as a pharmacist to submit a PA drug request. Furthermore, if the drug request is not approved through the computer system, the pharmacist must call a live agent to discuss the request. There is a need for a PA computer system that provides online, real-time prescription drug prior authorizations through multiple interfaces to a comprehensive authorization process. There is a need for PA computer system that provides online, real-time prescription drug prior authorizations to multiple users such as pharmacy benefits providers, physicians, and pharmacies. The average cost per contact using current fax and telephone methods is estimated to be $7. With a 25% annual reduction in provider contacts for prior authorization through live agents, the estimated savings potential for one year for a group benefits provider could be $1.74M.